Bhs billionaire Philip Green launched into the takeover battle for Safeway today by confirming he was considering a cash offer for the supermarket chain.
In a statement to the City, the retail entrepreneur said he had formally requested information from Safeway in order to size up a bid for the grocer.
Any takeover offer will be made by a new company controlled by Philip Green’s family.
But the entrepreneur added: “Deliberations are, however, at a very early stage and there can be no certainty that an offer will be forthcoming.”
A bid for Safeway would mark Green’s first foray into food retailing, and it is widely believed any takeover team would include former ASDA boss Allan Leighton.
Leighton held talks with Safeway five years ago but the deal collapsed and US giant Wal-Mart gatecrashed the deal, buying ASDA for £6.7bn.
Green already owns Bhs and Arcadia, the fashion group which runs the Dorothy Perkins, Burton and Top Shop brands.
His interest in Safeway, the UK’s fourth-largest supermarket chain, will lead to yet more interest in a takeover battle that looks certain to be a classic.
Last week Wal-Mart, Sainsbury’s and US buyout giant Kohlberg Kravis Roberts all declared their interest in Safeway, which agreed a takeover deal with Morrisons just days before.
Morrisons struck a £2.9bn all-share deal with Safeway but the value of the bid has since fallen to around £2.5bn following a slide in Morrisons’ market value.
Sainsbury’s said it was willing to offer a cash and share deal of around £3.2bn, a level which the City feels could easily be trumped by any cash bid from Wal-Mart.
Green said today he had requested from Safeway the same information made available to his rival bidders under rule 20 of the Takeover Code.
The entrepreneur snapped up Arcadia for £770m in September, creating one of the biggest clothing retail businesses in the UK and one to rival high street giant Marks & Spencer.
Arcadia’s then chief executive Stuart Rose made £23m from the deal and it is thought he may also be brought in as part of Green’s team for Safeway.
Safeway runs 479 stores in the UK and is seen as the last major acquisition opportunity in the cut-throat supermarket sector.
The group represents what may be the final chance Sainsbury and Wal-Mart have to catch the clear market leader Tesco.
Bids from both Sainsbury’s and Wal-Mart would have to be cleared by the Office of Fair Trading, but Mr Green’s position means he may avoid referral to the competition authorities.
A successful bid for Safeway would cement the billionaire’s standing in the retail sector.
Seen as bold, brash and aggressive by his critics, Green’s growing army of supporters view him as loyal, skilful and generous.
His generosity broke new ground last year when he flew 250 guests to a three-day toga-themed party to celebrate his birthday in Cyprus.
His ability has shone through most recently with his success at Bhs – now worth an estimated five times the £200m he paid for it little over two years ago.
City bookie Financial Spreads immediately installed Philip Green as second favourite in the race to win Safeway at 5-2.
It believes Wal-Mart is the 13-8 favourite, with Kohlberg Kravis Roberts at 3-1, Sainsbury’s 7-2 and Morrisons 6-1.
Richard Ratner, retail analyst at Seymour Pierce, said he still believed Wal-Mart would win the battle for the group.
But he added: “I think Philip Green’s view is that he won’t be refered to the competition authorities while others will.
“And if there’s any blue sky between himself and Wal-Mart’s bid, it may be that fund managers will go for something that is certain rather than waiting six months for a deal that could be stopped by the Competition Commission.”
He added: “I can’t believe he will spend any money on fees and go ahead without believing he has a good chance of succeeding.”
Safeway’s shares were up 4% in morning trading, a rise of 12.75p to 317.75p, valuing the group at £3.35bn.
In a short statement to the City, the group said it noted Green’s interest and would “make further announcements as and when appropriate”.
